China's outsourcing companies are aiming to replicate the success of their Indian rivals to attract a larger share of U.S. companies seeking to diversify business beyond India. Chinese software makers have traditionally focused on its fast-growing domestic market and Japan and Korea. But as competition intensifies at home, they have started to look abroad, particularly at the United States, for new growth. Increasing demand from the United States has helped drive China's software export revenue to grow sevenfold since 2000 to USD 2.8 billion, said Neusoft Group, China's largest outsourcer.
"U.S. firms are farming out jobs to China at a very high speed," Walter Fang, chief technology officer of Neusoft said at the 2005 China IT Services Summit held in New York. "US companies are outsourcing to China to mitigate risks," Fang added. "They do not want to put all the eggs in one basket." Neusoft's U.S. outsourcing segment rose more than 60 percent last year, higher than the 12 percent to 15 percent growth in its domestic market. However, Neusoft's U.S. segment accounts for less than 10 percent of its USD 34 million outsourcing revenue. Its sales totaled USD 290 million last year.
China has become a leading maker of computers and electronic devices but lags behind in software. At annual sales of USD 27 billion, China's software industry accounts for only 3.3 percent of the global software market. But several new companies have raised the competitive stakes abroad.
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